The Texas foreclosure laws that stipulates foreclosure proceedings in the state provides lenders the freedom to choose between judicial and non-judicial processes to foreclose deeds of trust or mortgages that are listed in foreclosure listings due to default. The time required to complete foreclosures proceeding in Texas is 60 days. The security instruments authorized and recognized by the state are the deeds of trust and mortgages. Texas foreclosure laws provide for deficiency judgments but do not recognize the borrower's Right of Redemption. According to laws, the limit on the deficiency judgments awarded to lenders is fixed at the difference in the loan balance and the market value of the distressed property.

A very important feature called the Power of Sale clause is present in certain security instruments such as mortgage agreements. This clause requires the borrower to sell his property in order to repay the balance of the loan balance in default if he is unable to make regular payments. If this clause is present, non-judicial foreclosure proceedings are followed, or else judicial foreclosure processes are used. While judicial foreclosure proceedings require the lender to obtain a court order to sell the property, non-judicial proceedings contain no such requirement and the lender is free to sell the property, provided a few guidelines are followed.

Procedures to be adhered under Texas foreclosure laws

When the Power of Sale clause is present in mortgage agreements and other security instruments, a non-judicial proceeding is pursued. This requires that the specific terms of the clause be followed scrupulously. If the terms are not specified, the state has a set of guidelines that must be followed.

The state's laws require the lender to serve the borrower with a notice at least twenty days before the date of the foreclosure sale. Any foreclosure proceeding that is initiated can take place only after this notice has been served.

At the expiry of the borrower's notice period, the lender must file a Notice of Foreclosure at the county clerk's office in the area under whose jurisdiction the property falls. After serving a copy of this notice to the borrower, another has to be posted at the local county's courthouse a minimum of 21 days prior to the foreclosure sale.

The day reserved for foreclosure sales proceedings is always the first Tuesday of every month. The proceedings are conducted even if the day is a holiday. The sale has to be in the form of a public auction. Any person, including the lender, is authorized to bid for the distressed property and it is handed over to the person bidding the highest amount.